ECO101H1 Chapter Notes - Chapter 7: Marginal Revenue, Capital Accumulation, Marginal Product
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ECO101H1 Full Course Notes
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Pvpianist = ,000 + ,000/(1. 05) = ,190. 48. Debbie is about to decide which career path to pursue. She has narrowed her options to two alternatives. She can either become a marine biologist or a concert pianist. In the second, she works in the labor market. If debbie becomes a marine biologist, she will spend ,000 on education in the first period and earn ,000 in the second period. If she becomes a concert pianist, she will spend ,000 on education in the first period and then earn ,000 in the second period. (a) suppose debbie can lend and borrow money at a 5 percent annual rate. Debbie will compare the present value of income for each career choice and choose the career with the largest present value. If the discount rate is 5 percent, and. If the rate of interest is 15 percent, however, the present value calculations become and.